No mere technicality (KOR)

Dec 29,2018

Many are dreading the impact of a 10.9 percent hike in the minimum wage starting Jan. 1 after the economy was badly shaken by a 16.4 increase at the beginning of 2018. Despite the general angst, the government remains strangely sanguine. It is determined to go ahead with a revision to the minimum wage act that includes paid holidays as hours worked which could result in companies technically underpaying their workers. It claims it has moderated the impact of that change by leaving out some special holidays called by individual companies.

The Blue House and government claim there will be no extra burden on employers as the revision only define working hours. But their comments underscore their ignorance of reality. Few small merchants or self-employed pay wages on days off. The practice was possible due to the ambiguity in the concept and lack of strong punishment.

Although necessary for employee benefits, employers cannot easily go along. When counting weekly holidays, the minimum wage for an employee working 15 hours or longer should be 10,020 won ($8.90) per hour instead of the legal base of 8,350 won starting Jan. 1. Employers who had not covered weekly holidays would have to pay 33 percent extra. Large companies also would be influenced. For automakers, labor costs would go up by 700 billion won. The government will allow a six-month grace period for employers to fix their pay systems, but employers would have to wrestle with unions if they want to minimize the increase in labor costs.

Once the act goes into force, large and small companies alike could become criminals if they go on with their existing pay systems. The court may have to change its judgment of counting just working hours in the base salary. There could be many disputes due to differences in legal interpretations. The government should take more time to listen to voices from the field and try to find a social consensus before enforcing the controversial act. It should invite discussions on weekly holidays and abnormal pay systems before railroading through an administrative act that can cause major chaos.